Introduction: Understanding the nuances of the revised time limits for adjudication in GST is crucial for taxpayers navigating the intricate landscape of the CGST Act, 2017. Section 73 plays a pivotal role in determining tax liabilities, and recent updates have implications worth exploring.

Section 73 of the CGST Act, 2017 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts.

Issuance of order under section 73(9) of CGST Act, 2017

This sub-section of Section 73 provides for determination of demand and issuance of order for determining the amount of tax, interest and penalty. However, such an order should be issued after considering the representation.

As a principle of natural justice, an opportunity of personal hearing should be provided before issuance of an order to a taxable person. However, no such opportunity needs to be provided before issuance of show cause notice.

Time Limits For Adjudication In GST

For show cause notice issued under section 73 of the CGST Act, 2017, the proper officer can levy a penalty for an amount not exceeding 10% of the tax or INR 10,000/- whichever is higher, as provided by section 73(9) of the CGST Act, 2017.

Where the person files a reply or representation, the proper officer after considering the representation, the proper officer shall issue an order consisting of the amount of tax, interest and penalty (i.e. tax + interest + penalty). The amount of penalty shall be higher of 10% of tax or Rs. 10,000/-, whichever is higher. A summary of such order shall be uploaded electronically specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax. Such summary of order shall be treated as a notice for recovery.

On time barring of scrutiny of GST returns for financial years 2017-18, 2018-19 and 2019-20, it may be noted that the whole process of scrutiny of return under section 61 and rule 99 of GST Act / Rules, 2017 takes around 5 to 6 months. Hence, all field formations / proper officers were advised to ensure timely issuance of order under section 73(9) for the scrutiny of returns for periods as mentioned in the CBIC vide Notification No. 9/2023 Central Tax dated 31.03.2023. (This has been further extended by Notification No. 56/2023-CT dated 28.12.2023).

Time limit for Order under section 73(10) of CGST Act, 2017

As per sub-section (3), the proper officer is required to pass an order within a period of 3 years from the

  • due date for filing of Annual return for the year to which the short payment or non-payment or input tax credit wrongly availed or utilised relates
  • date of erroneous refund

The demand proceedings launched under the provisions of section 73 are required to be concluded within a period of 3 years from the due date of filing the annual return or actual date of filing the annual return of the relevant period, whichever is earlier.

In case the proceedings were started under section 73 of the CGST Act, 2017, but no order was issued within the prescribed period of 3 years of date of filing of annual return of relevant year, the proceedings will come to an end due to reason of expiry of limitation period. Any order issued after the expiry of limitation period of 3 years will be treated as defective order thus ineffective.

Extended Time Limits

Vide Notification No. 9/2023 Central Tax dated 31.03.2023 and Notification No. 56/2023-CT dated 28.12.2023, the time limits for issue of show cause notices and for passing of adjudication orders, under Section 73 of the CGST Act have been extended by the Central Government.

As per Notification No. 9/2023 Central Tax dated 31.03.2023, time limit specified under section 73(10) for issuance of order under section 73(9) of CGST Act, 2017 for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized for any reason other than reason of fraud or any willful misstatement or suppression of facts to evade tax relating to the period has been extended as specified below:

Financial Year Existing time limit for issuance of order U/s 73(9) of CGST Act Extended time limit for issuance of order U/s 73(9) of CGST Act
2017-18 Up to 31st day of December, 2023
2018-19 Up to 31st day of March, 2024 Upto 30th day of April, 2024
2019-20 Up to 30th day of June, 2024 Upto 31st day of August, 2024

Under powers vested in section 168A of CGST Act 2017, vide Notification No. 56/2023-CT dated 28.12.2023, Central Government has further extended the time limit provided under section 73(10) for issuance of order under section 73(9) of CGST Act, 2017 for recovery of tax not paid or short paid or input tax credit wrongly availed or utilised for FY 2018-19 and 2019-20 as follows:

(i) for the financial year 2018-19, up to the 30th day of April, 2024

(ii) for the financial year 2019-20, up to the 31st day of August, 2024.

Earlier, these time limits were extended till 31-03-2024 and 30-06-2024 respectively vide Notification No. 9/2023 Central Tax dated 31.03.2023. It may be noted that such time limit has not been extended for FY 2017-18 and will remain the same, i.e. 31-12-2023.

It may further be kept in mind that such extension of time is only for cases covered under section 73 and not under section 74 which deals with tax evasion arising out of fraud, suppression etc. Also, there is no extension of time for cases pertaining to financial year 2017-18 under section 73.

Conclusion: Taxpayers and professionals must be aware of the revised time limits for GST adjudication to ensure compliance. Extensions offer relief for specific financial years, addressing concerns related to scrutiny and order issuance. Staying informed about the nuances of these changes is essential in navigating the dynamic GST landscape.

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